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Wednesday, 22 May 1996
Page: 1102


Mr WILTON(5.03 p.m.) —In the second reading speech the Minister for Transport and Regional Development (Mr Sharp) referred to the Shipping Grants Legislation Bill as giving effect to the government's pre-election commitments to repeal the International Shipping (Australian-resident Seafarers) Grants Act 1995 and the Ships (Capital Grants) Act 1987. The Shipping Grants Legislation Bill, which we are now debating, is not driven in any sense by the government's desire to fulfil an election promise. Indeed, given the fact that this government has already broken so many of its election promises, it is a cruel irony that it has chosen to fulfil this one—especially given its disastrous consequences. Neither is this bill driven by any real desire of the government or the minister to establish a viable long-term restructuring of the Australian shipping industry.

The fact is that this bill is driven by spite and vindictiveness of a degree unparalleled by any government in recent times. Of course, the minister and the government's rabid dislike of the Maritime Union and the government's inane rantings on this topic are well known to us all. But perhaps less well known is the minister's view on the shipping companies themselves. In response to the second reading of the International Shipping (Australian-resident Seafarers) Grants Bill on 18 October 1995, the current minister for transport had to this to say about shipping companies:

You watch over the next three years, as coastal traders start to rearrange their schedules to ensure that they are eligible for the grant as well. I will bet my bottom dollar on the fact that those people in the coastal trades will see an opportunity to get some money for themselves out of this scheme; they will make rearrangements to their schedules, and they will have their snouts in the trough by getting into this grant system as well.

This churlish and rather ill-founded attack, at best, may support the contention that the minister treats all those involved in his portfolio with equal disdain.

I repeat: we are not debating this bill because the government in any sense of the word believes that it is the foundation of a policy which will build on the effective reforms already established in the restructuring of the shipping industry by the former government. Rather, we are debating it due to the indecent haste with which the minister and this government wish to vent their collective spleen on the Maritime Union of Australia and other Australian seafarers.

The message contained in the Shipping Grants Legislation Bill will undoubtedly undermine the viability of the Australian shipping industry. As BHP Transport put it in its April 1996 edition of its magazine BHPT Ironships:

BHPT does have concerns that the government's stated policies do not necessarily support the attainment of a vibrant Australian shipping industry. As an example, its stated intentions to remove the capital grants and the PAYE grants would have a dramatic effect on the ability of the Australian-flagged fleet to compete internationally.

The inclusion of fiscal measures such as these are important in ensuring Australian vessels share a competitive base similar to those of international vessels against which they compete. As I, and other speakers and industry, have already pointed out, this bill will have a wide range of detrimental effects. Australian crews are highly trained. This legislation will result in the use of poorer quality foreign crews and older, less well maintained vessels. This will significantly increase insurance costs paid by users, particularly given that Australian vessels undertake longer voyages, often in very severe conditions. Needless to say, the risk of environmental damage will also be increased.

Last year we had a very serious accident at Port Adelaide involving a Saudi Arabian flagged livestock carrier. A subsequent report into the incident conducted by the Department of Transport's Marine Incident Investigation Unit concluded that a lack of knowledge, inexperience and the poor condition of equipment all contributed to the accident. The investigation further found that the crew lacked knowledge and experience in operating a steam plant and had panicked when the incident, which involved a fire in a boiler on board the vessel, occurred.

The ship did not have a telephone which the crew could use to notify the Port of Adelaide authorities and to alert emergency services of the problems on board the ship. The World Bank's maritime section has warned that the shipping industry faces an unprecedented crisis as the international shipping fleet becomes a critically ageing fleet.

The Australian Maritime Safety Authority reported earlier this month that there were a record number of ships impounded last year for failing to meet basic seaworthiness standards. In 1995, the authority detained 244 vessels. In the previous year 153 vessels were detained and in 1993 some 72 vessel were detained. The increase is a direct indicator that risks and falling standards go hand in hand with an ageing fleet.

Also of serious concern is the fact that last year the House of Representatives Standing Committee on Transport, Communications and Infrastructure was presented with evidence of some of the horrific practices which are becoming all too common amongst crews on foreign ships. Some of those horrific practices reported to the House of Representatives transport committee emanated from vessels under the flag of Third World countries, notably the Philippines and Indonesia, where crews are grossly underpaid, sexually assaulted and physically abused and there were even several cases of bashings and murders. These ships of shame will be the same beneficiaries of the destruction of the Australian shipping industry that this piece of legislation will foster.

At a time when the government and economic analysts are calling for measures to deal with the level of Australia's foreign debt, the decimation of the industry will have a negative effect on the net services component of the current account. The Bureau of Transport and Communications Economics estimated that the current account deficit for 1986-87 would have been increased by $440 million if not for our own merchant fleet.

The demise of the national merchant fleet would also impact on our defence capacity. Several shipowners have entered into a memorandum of understanding with the navy to provide assistance in case of a national emergency. Some even have facilities on their ships to specifically assist the navy. The lack of Australian trained seafarers may also make emergency crewing of the navy much more difficult.

I would also like to point out that, from an environmental perspective, sea transport is more desirable than modes of land transport. Bulk shipping uses only 0.2 megajoules of energy per tonne per kilometre compared with 0.4 for government rail and 1.4 for articulated trucks. In terms of greenhouse gas emissions, bulk sea transport generates 13 grams of car bon dioxide per tonne per kilometre compared with 29 grams for government rail.

The decline in the maritime industry, which this bill will initiate, will also have spin-off effects in other areas, including marine insurance, towage and pilotage, development and supply of shipping technology, and ship management and repair and maintenance. Australia will also lose vital information on the state of its international shipping markets.

As a result of this legislation, our port and other maritime regulatory authorities will have a greatly reduced pool of skilled labour from which to draw. This will affect not only the provision of harbourmasters and ship control officers, but also safety investigation and emergency personnel in state departments and the Australian Maritime Safety Authority.

It was only some six months ago, in December of last year, that the Chief Executive of the Australian Maritime College, Captain Rod Short, set out the great potential for the Australian maritime industry presented by the looming shortage of trained personnel around the world to operate both on ships and at ports. Captain Short spoke of a world shortage of at least 400,000 well trained maritime officers in the near future. Australia is well placed to more than double its training capacity, thus seizing a slice of this new growth industry and ensuring valuable foreign income, as well as staking our place as a senior player in the international maritime industry. The potential new market must be put at risk by the government's running down of the Australian shipping industry, which will result from this harmful and misguided piece of legislation.

The early—and, in essence, retrospective—withdrawal of the capital grant will have a number of effects which specifically include the fact that Australian shipowners will have less incentive to invest in new ships and technology. As a result, the fleet will age, leading to increased costs which must ultimately be passed to other users. Further increases in capital productivity, and hence decreasing manning levels, will be curtailed as the cost of new vessels becomes a disincentive to further investment.

There are at least three vessels currently under construction that were to be delivered in the 1996-97 fiscal year. This bill will see a direct, unplanned increase of millions of dollars in the cost of these vessels due to changes in the capital grants program contained in this legislation. Shell, for example, has a 40,000-tonne deadweight mixed petroleum product tanker under construction in Poland for delivery in March next year. This ship was specifically planned and budgeted to fit in with the current legislation and will cost $US44 million. It will operate out of Geelong to other Australian ports, although the financial viability of the products and the project have now been affected.

Mackay Refined Sugars has a replacement for its ship, the Innovator, which is currently under construction and which, when finished, will be the world's first purpose-built refined sugar carrier. BHPT has the Iron Yandi under construction in Korea and expects to take delivery of it in December this year. This is a 170,000-tonne bulk carrier. Again, the investment timing and decision behind the building of this ship was predicated on the continued existence of the capital grant which this legislation seeks to withdraw.

The Financial Review on 17 May reports the Executive Director of the Australian Shipowners Association, Mr Lachlan Payne, as saying that further planned investments in new shipping worth $250 million would be shelved as a result of this retrograde legislation, particularly the abolition of the capital grants and accelerated depreciation scheme for new ships.

Repealing the grant paid to international trading vessels will have a number of effects, including to provide an incentive for Australian vessels to switch their operations from international to coastal operations, therefore placing further pressure on the current account deficit. This will occur as a result of increasing the cost of international trades relative to coastal ones. There are a number of examples of companies that, as a result of this grant, have reorganised their fleet schedules to increase their export earnings. Australian shipowners will be placed at a competitive disadvantage in relation to ships registered in other countries where there are generous tax concessions and, specifically, where ships are registered in tax havens.

Most countries, be they OECD or otherwise, provide fiscal assistance to their national fleets. This assistance may include depreciation allowances, concessional tax rates, or concessional loans and subsidies. As such, the abolition of the current assistance program will not create a level playing field for Australian shipping in the international market but will place the industry at a distinct competitive disadvantage.

Australian shipowners and workers alike have made significant gains in productivity and competitiveness in the last decade. Since 1989, over $2 billion has been committed to investment in ships, with the result that the Australian fleet is half the age of the world fleet. Manning levels on Australian international ships have fallen from an average of 31.6 seafarers in 1986 to 18.4 seafarers in 1995, which the minister, in his second reading speech, concedes is now consistent with international standards. He also intimated that industrial disputes had hit their lowest level in a decade in 1992-93 when only 23 ship days were lost due to crew disputes.

It is unfair and unjust to attack an industry that is making such progress halfway through its restructuring process merely to satisfy the government's disdain of the Maritime Union and, perhaps to a lesser degree, the shipping companies. It would serve as an omen for things to come. The previous Labor government had a fine record in the development and implementation of sector specific industry policy, and the current government and minister for transport could learn much from this example.

Whether working with the Button plan for the reform of our automotive industry, which saw exports quadruple from $400 million in 1984 to over $1.5 billion in 1994, with an expected $2 billion figure being reached by the year 2000, working with companies in the pharmaceutical industry such as Glaxo and Faulding, or working with the phasing out of tariffs in the textile, clothing and footwear industries, the great success in each of these industry specific sectoral examples was predicated on the extensive and inclusive consultative processes which involved all players—whether they be employers, union or government—working together in pursuit of the best outcomes for all concerned.

Following on from the fine work done by the former Minister for Transport, the Hon. Ralph Hunt, in commissioning Sir John Crawford to begin a process of encouraging the key players in Australia's shipping industry to come together to consider the future development of the industry, the Labor government set up the Maritime Industry Development Committee.

An industry development package was subsequently crafted from this process which was based along three fundamental tenets: the first was that the unions involved accepted that changes to work practices were necessary to improve efficiency; secondly, ship operators would invest, where commercially feasible, in high technology to facilitate new crewing arrangements; and, thirdly, the government would provide financial incentives to facilitate the process of reform.

It was this approach by the previous Labor government which achieved real results in Australia's shipping industry. Yet, by contrast, the coalition government's approach is piecemeal and antagonistic. As Mr Lance Hockridge from BHP Transport has said:

Removing this assistance without at the same time bringing in ways for the industry to reduce costs by at least the same amount creates a hiatus where we cannot provide competitive shipping service.

I believe there is nothing wrong with subsidies. Indeed, the egalitarian nature of Australian society is underpinned by subsidies throughout its economic structure. What I do have a significant problem with is the sheer ignorance demonstrated by those on the other side. Some claimed earlier that they know the maritime industry because seafarers come into their pub once in a while or they know the maritime industry because they worked for a short time on a ship 10 years ago. That is the sort of thing that I do have a problem with. An act of this significance cannot be premised and founded on such ignorance. It is on that basis that I sincerely hope that the government's approach to the Australian shipping industry is not a forerunner of their broader industry policy. Australian industry and our country as a whole cannot afford it. To that end, I urge honourable members to oppose this bill.